Kosmos comes up dry again offshore Suriname

Kosmos Energy said on Wednesday it was abandoning the Pontoenoe-1 well offshore Suriname after failing to find oil.

This is the second dry well in a row drilled by the company in the Dutch-speaking South American country. The company came up dry in June at the Anapai-1A well in the Block 45.

Kosmos said it encountered high-quality reservoir at Pontoenoe-1 exploration well in Block 42 but the primary exploration objective proved to be water bearing and did not find commercial hydrocarbons.

Commenting on the Pontoenoe result, Kosmos said it believes there was evidence of a working source kitchen and the prospect failed due to a lack of trap.

“The well will now be plugged and abandoned and the well results integrated into the ongoing evaluation of the remaining prospectivity in Kosmos’ acreage position,” the company said.

Andrew G. Inglis, Chairman and Chief Executive Officer, said, “We are in the early stages of exploring the emerging Suriname-Guyana basin, and given the indications of a mature source, quality cretaceous reservoir, and the independent nature of the prospectivity we believe there is significant remaining potential in Block 42. Our current plan is to test the next prospect in 2020.”

Kosmos holds rights in the Block 42 contract area under a production sharing contract with the Government of Suriname’s Staatsolie Maatschappij Suriname N.V. (“Staatsolie”).

The block ranges in water depth between approximately 2,000 and 2,500 meters and covers an area of over 6,000 square kilometers gross. Kosmos (33.3 percent) is the exploration operator of Block 42 and is joined by its partners Hess (33.3 percent) and Chevron (33.3 percent).

All eyes have been on Suriname as Kosmos ramped up its search for oil at Pontoenoe in wake of a record 9 discoveries made on the Guyana side of the basin by ExxonMobil. Analysts have been awaiting word, eager to find out if the working hydrocarbon system in the Stabroek Block extends to Suriname.

Kosmos said it expects to generate substantial free cash flow in 2018, allowing it to initiate a dividend in the first quarter of 2019. The company, which ended the third quarter with net debt of about $2 billion and liquidity of about $650 million, said it now expects 2018 capital expenses to be about $400 million.